Monday, November 19, 2007

THE corporate shareholder activity surged last week with huge numbers posted by directors, substantial shareholders, and listed companies, based on filings on the Singapore Exchange from Nov 12 to 16. The increase in the trading coincided with the 4.4 per cent drop in the Straits Times Index (STI) last week to 3,440.96. Directors and substantial shareholders were very active last week with 47 firms that recorded 152 purchases versus 23 companies with 72 disposals. The number of purchases and sales were sharply up from the previous week’s four-day totals of 88 acquisitions and 56 disposals, respectively.

Although the overall trading was up, there was a significant drop in the number of institutional shareholders that reported trades last week. A paltry eight fund managers posted 32 purchases and six asset managers did 48 sales last week. The number of institutions were down from the previous week’s four-day totals of 11 buyers and 11 sellers. The buying among fund managers was particularly low, as the number of purchases last week was sharply lower than the previous week’s 52 acquisitions.

On the buybacks side, a total of 17 listed firms recorded a whopping 65 repurchases worth $48 million.

The figures were sharply up from the previous week’s nine companies, 32 transactions, and $32 million.

The trades last week boosted the buyback totals this month to 19 firms, 105 trades, and $87 million. The figures are already higher than the 14 companies, 45 transactions, and $18 million in October, and there are still 10 trading days remaining in November. The surge in the buybacks this month is not surprising as the STI has fallen by 11.2 per cent from the record high of 3,875.77 on Oct 11.

The surge in the buybacks this month following the steep fall in the market from the record high in October is similar to heavy buyback activity in August, after the market fell by 14.6 per cent from what was then the record high of 3,665.13 in July. The sharp correction prompted 27 firms to record a whopping 210 repurchases worth $208 million in August, which were significantly more than the four companies, 83 trades, and $53 million in July.

Four listed firms repurchased shares for the first time last week. Three of the firms - the Lexicon Group, Chip Eng Seng Corporation, and DBS Group Holdings - bought back following the steep fall in their share prices. The exception was Magnecomp International as the group recorded its first buybacks after the stock rebounded by 17 per cent. Aside from those four firms, investors should also watch out for Wing Tai Holdings, as the group resumed buying back after the counter fell by 31 per cent.

Lexicon Group

Niche magazine publisher Lexicon Group bought back shares for the first time since listing in July 1998, with 1.7 million shares purchased last Thursday and Friday at seven cents each. The acquisitions were made after the stock fell by 33 per cent from 10.5 cents on Sept 12. The repurchases were made after the group announced its interim results last Wednesday.

The Lexicon Group posted a loss after tax of $3.51 million for the six months to Sept 30, 2007, versus a loss of $34.98 million in the same period last year. The stock closed flat from the group’s buyback price at seven cents on Friday.

Chip Eng Seng Corporation

Construction firm Chip Eng Seng Corporation bought back shares for the first time since listing in November 1999 with 2.3 million shares purchased last Thursday at 60 cents each. The buyback was made on the back of the 31 per cent drop in the share price since Oct 5, from 87 cents.

The group’s buyback was made after founder and executive chairman Lim Tiam Seng’s purchase last month. Mr Lim picked up 100,000 shares on Oct 1 at 79 cents each, which boosted his deemed holdings to 83.5 million shares or 12.5 per cent of the issued capital. He previously acquired 500,000 shares on Feb 21 at 40 cents each. Chip Eng Seng announced its interim results in August with net profit up by 859.9 per cent to $19.38 million for the six months to June 30, 2007. The counter closed sharply higher from the company’s buyback price at 67.5 cents on Friday.

DBS Group Holdings

Investment holding and banking & financing firm DBS Group Holdings has bought back shares for the first time since buybacks were implemented by the Singapore Exchange in June 1999, with 900,000 shares purchased from last Monday to Friday at an average of $19.76 each. The initial buybacks were made after the stock fell by 12 per cent this month from $22.40.

Also positive is director John Alan Ross with 5,000 shares purchased last Thursday at $20.18 each, which increased his direct holdings by 33 per cent to 20,000 shares. He also acquired 5,000 shares on Aug 23 at $20.50 each. Mr Ross previously acquired an initial 10,000 shares from April 2003 to March 2005 at $8.75 to $15.30 each.

Fellow director Kwa Chong Seng also bought shares in August with 50,000 shares purchased at $19.00 each, which increased his deemed stake by 54 per cent to 142,000 shares. He previously acquired 50,000 shares in February 2005 at $15.40 each. The stock closed at $19.50 on Friday.

Magnecomp International

Suspension assemblies manufacturer Magnecomp International has bought back shares for the first time since listing in January 1998, with 286,000 shares purchased from last Monday to Wednesday at an average of 90 cents each. The trades were hefty as they accounted for 36 per cent of the stock’s trading volume. The initial buybacks were surprising as they were made after the stock rebounded by 17 per cent from 77.5 cents on Oct 22.

The acquisitions were also made after the group announced its Q3 results on Nov 9. Magnecomp posted a net profit of $7.52 million for the three months to Sept 30, 2007, versus a loss of $4.45 million in the same period last year. Earnings in the first nine months fell by 24.1 per cent to $22.79 million.

There were also semi-bullish signals from executive non-independent director and chief executive officer Steven Glenn Campbell this month. The CEO acquired 625,000 shares last Tuesday via exercise of options at 57 cents each, which increased his direct holdings by 63 per cent - to 1.63 million shares or 0.7 per cent of the issued capital. He refrained from taking profits despite the stock trading sharply higher from his exercise price on that day at 89 cents.

The fact that he did not take any profits, however, was not unusual as he also did not sell any of the one million shares that he acquired via options from May 2004 to April this year at an average of 16.4 cents each.

Property developer Wing Tai Holdings recorded its first buyback since December 2002 with 437,000 shares purchased last Friday at $2.66 each. The rare buyback was made on the back of the 31 per cent drop in the share price since October from $3.86.

Although the recent trade was prompted by the steep fall in the share price, the group’s buyback price was sharply higher than its previous purchase prices, based on the 11.9 million shares that the company acquired from August 2000 to December 2002 at $1.29 to $0.51 each.

The stock closed slightly higher from the group’s buyback price at $2.73 on Friday.